American Economy Bleaker than its Façade
More voices are harmonizing with mine by saying that the recession already began this year. (Which is not to say they are saying it with any awareness of what I’ve been saying, as I don’t suppose they are.) Today, Ed Dowd says that Donald Trump is inheriting “a turd of an economy” because the facts have been concealed (read “stealth recession)” behind “such blatant manipulation of government statistics.”
Dowd believes the economy will roll over soon, meaning not that it hasn’t already but that it will go low enough that it will become impossible to hide the truth behind manipulated statistics. Let’s hope that happens before Biden leaves office so that Trump doesn’t get blamed for all of it.
Like me, Dowd asks why the Fed made a historically large rate cut when the economy is supposedly strong and the Dow is higher than ever before.
I have never seen such blatant manipulation of government statistics.
There is government spending and government hiring to paper over what is truly a bad economy for the average man. When I was asked prior to the election who do you think will win the election, I said Trump has already won, according to the economic statistics.
Dowd’s prediction resonates with my own view (one often expressed by many observers) that Americans vote their pocketbooks and never re-elect an incumbent who is in charge during a recession that began in his term.
What really got Trump in was the economy, the real economy, not the stock market.
Or, as I said, quoting James Carville from the past, “It’s the economy, Stupid.”
The real economy has been rolling over, and we are just waiting for the financial markets to figure this out.
Government statistics will be updated, and it will show we started a recession sometime this year…
The incoming Trump Administration has to get out in front of the narrative. This was already baked into the cake. They just got handed fraudulent books. So, they are basically going to get blamed for what is coming.
We’ll see if the Biden admin can hold onto the play a little longer. Already, some of their statistics have started to look quite wobbly to everyone’s eyes. Job reports in the last few months have flung themselves back and forth between boldly positive and starkly negative and have been revised down in big chunks again and again for well over a year. Inflation is trying to push its head up. It’s not a reassuring picture.
This isn’t your father’s Trump rally
Not likely anyway. We all remember how the stock market soared in a history-making rally the day after Trump was elected back in 2016 and how it couldn’t stop climbing for months on end. The present rally, has already turned back down as bond yields are rising quickly, and Trump is going to get some blame for that because most economists (and me) are saying that his tariffs will create inflation, though the difference is that I’m saying inflation is already making a comeback, while the tariffs will make inflation even worse by creating shortages of much more affordable imported good.
Whether the tariffs are overall a good idea or not, that is just how tariffs work. They raise the cost of imported goods for Americans and hold down pressure on prices of domestically made goods that no longer have to try as hard to compete on price. However, any reader here, especially paying supporters who receive Deeper Dives, knows that inflation is already rising in the background and that I expected to see that break out into headline numbers once the summer was over. (We’ll get another view of what’s gong on twice this week, but we can be sure the government that is running the most “blatant manipulation of government statistics” Dowd has seen in his lifetime will do all it can to maintain the charade so that it looks muted at most.)
Dollar holding strong
Dowd is also of the same view as I have been on the dollar—that it is far from going away and is trading now higher than ever. Another story in the news today says many analysts are saying the dollar will soon be at parity with the euro. The recent moves are a Trump trade that has taken off as the stock rally fizzles and as bond yields attract money out of stocks for safe yields. The bet is that the euro devalues as tariffs add to the price Americans have to pay for European goods, causing Americans to buy fewer European goods. That means lower business demand for euros in the trade between US businesses and European businesses.
Of course, all of that assumes Europe will not fight back with equal tariffs of its own, which is how these kinds of trade wars almost always go. Then everyone trades more within their borders, resulting in less currency exchange both ways and higher prices of goods and foreign services both ways. Everyone pays more as tough international competition is throttled back.
Remember, the consumer always pays the cost of goods sold, so higher US import tariffs mean higher prices for US consumers and are effectively always a tax on domestic consumers. Higher export tariffs are paid by American companies exporting their products unless there is enough inelasticity in market demand for them to be able to raise their prices for foreign buyers enough to compensate for the export tariff without losing the sale, which is not usually the case.
Covid and Covid policy wrecks a labor force disaster
Dowd also points out that the Biden government’s draconian forced vaccine program has left us currently running with 10-13% more excess mortality. That, of course, is a big reason I gave clear back in 2022 for why the job numbers were badly broken: The population and the capable work force were badly broken by the Covidcrisis.
I didn’t come down on whether the labor force’s demise was due to Covid or the vaccine, but said it could be either and likely both, but I leaned more to the vaccine, which was why I refused the vaccine in the first place and became one of those unemployed non-statistics. I was a “non-statistic” because I was never counted in unemployment stats even though I lost my job for two years because, in my state, anyone becoming unemployed due to refusal to take the government’s odorous orders and vaccinate was not allowed to enroll on unemployment (and was censored from writing about their experience, too.)
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